UK gilts jump after April consumer price inflation disappoints; retail sales data in focus

The United Kingdom’s gilts jumped during European session Wednesday following disappointment among investors as the country’s consumer price inflation (CPI) missed market expectations, albeit better than the previous reading in March.

Now, market attention will turn towards the retail sales data for the month of April, due by end of this week for a detailed direction into the bond market.

The yield on the benchmark 10-year gilts, plunged 4 basis points to 1.046 percent, the super-long 30-year bond yields slumped nearly 3-1/2 basis points to 1.594 percent and the yield on the short-term 2-year traded 2-1/2 basis points lower at 0.716 percent by 10:55GMT.

Having briefly yesterday leapt a cent on headlines that Theresa May was set to offer a second referendum on her Brexit deal, sterling swiftly reversed that move – and more (it’s just slipped below $1.27) – after her latest initiatives to break the deadlock in Parliament fell horribly flat, Daiwa Capital Markets reported.

While she claimed to have ten new proposals to meet the demands of MPs from across the political spectrum, many simply appeared to be repackaged from previous commitments while others – such as the aforementioned commitment to an MPs’ vote on a referendum – rang hollow given May’s shenanigans in Parliament over the past couple of years.

Crucially, certain key new proposals (e.g. the options on customs arrangements to be voted upon by MPs) went nowhere far enough to appeal to Labour MPs, but at the same time went too far to retain the support of many Conservatives, the report added.

Meanwhile, the FTSE 100 remained tad 0.46 percent higher at 7,362.75 by 11:05GMT, while at 11:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at -69.95 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex